The deductions, made in line with the Petroleum Industry Act (PIA), represent 30 percent of Profit Sharing Contract (PSC) proceeds set aside for oil search in Nigeria’s frontier basins. These include the Chad Basin, Benue Trough, Anambra Basin, and other untapped hydrocarbon-rich regions, with the North being the main focus.
The FEF was created to diversify Nigeria’s oil production beyond the Niger Delta, but the initiative has faced controversy over transparency, national priorities, and long-term sustainability, especially against the backdrop of global climate commitments.
Push for Northern Oil Drilling
In May, NNPCL announced that drilling operations in northern Nigeria would resume by June, with focus on the Kolmani field, which straddles Bauchi and Gombe states.
Group Chief Executive Officer Bayo Ojulari, who assumed office in April, said exploration in the North remained a top priority under the PIA framework. He described government efforts as “on track,” despite decades of limited results and reports of over $3 billion already spent on frontier exploration since the early 2000s.
While earlier claims suggested a one billion-barrel reserve discovery in the Kolmani basin, no large-scale commercial production has been achieved.
Monthly Breakdown of Deductions
Financial records show significant fluctuations in the monthly allocations:
- January: $8.16m + ₦9.73bn = ₦22.2bn
- February: $17.59m + ₦5.8bn = ₦31.7bn
- March: $18.66m + ₦10.47bn = ₦38.3bn
- April: $28.51m + ₦17.71bn = ₦61.4bn (highest single-month deduction)
- May: $1.88m + ₦33.58bn = ₦36.5bn
- June: $24.17m + ₦499.1m = ₦38.7bn
- July: $3.99m + ₦732.9m = ₦6.8bn
The seven-month cumulative total stood at ₦235.6bn, highlighting the scale and pace of funding dedicated to frontier exploration.
Host Community Concerns
The spending raises questions of equity when compared to allocations for Niger Delta host communities. According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), oil-producing communities received ₦98bn and about $150m (₦328.2bn) under the Host Communities Development Fund (HCDF) over the past four years.
By contrast, the Frontier Exploration Fund’s ₦235.6bn in just seven months amounts to almost five times the average monthly allocations to host communities (₦33.7bn vs ₦6.8bn).
Policy Debate
Analysts, especially from the Niger Delta region, argue that the funding imbalance underscores a strong government preference for opening new oil frontiers rather than addressing the environmental and social impact of existing oil-producing communities.
The contrast, they warn, could deepen long-standing grievances in the Niger Delta while testing Nigeria’s commitment to both sustainable development and equitable resource distribution.
